Mezzetti, Claudio and Tsetlin, Ilia, 1970- (2008) Auctions in which losers set the price. Working Paper. Coventry: University of Warwick, Department of Economics. (Warwick economic research papers.

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Abstract

We study auctions of a single asset among symmetric bidders with affiliated values. We show that the second-price auction minimizes revenue among all efficient auction mechanisms in which only the winner pays, and the price only depends on the losers' bids. In particular, we show that the k-th price auction generates higher revenue than the second-price auction, for all k > 2. If rationing is allowed, with shares of the asset rationed among the t highest bidders, then the (t + 1)-st price auction yields the lowest revenue among all auctions with rationing in which only the winners pay and the unit price only depends on the losers' bids. Finally, we compute bidding functions and revenue of the k-th price auction, with and without rationing, for an illustrative example much used in the experimental literature to study first-price, second-price and English auctions.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HF Commerce
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Auctions -- Mathematical models, Information asymmetry, Game theory, Mathematical models, Econometric models
Series Name:	Warwick economic research papers
Publisher:	University of Warwick, Department of Economics
Place of Publication:	Coventry
Date:	29 February 2008
Number:	No.845
Number of Pages:	20
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
Funder:	Insead
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URI:	http://wrap.warwick.ac.uk/id/eprint/1370

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